Thursday, December 11, 2008

Thing One and Thing Two

I've been trying to find info on a couple of things regarding Tribune's bankruptcy filing. Here's what I have found out so far:

ESOPs -- Seem to be safe for now, but that's only because the ESOP is barely a year old and has no distributions. As mentioned in earlier posts, the ESOP is great for Tribune because it provides a substantial tax benefit. Tribune does not have to pay corporate taxes because it is employee owned. There's also another benefit: ESOPs can borrow from banks, and both the interest and principal payments are tax deductible for the corporation, substantially reducing borrowing costs. ESOPs are not necessariyl great for employees, however, since ESOPs are totally invested in the company, in this case a bankrupt one.

Health benefits to terminated employees -- The bankruptcy court says health benefits to employees who took buyouts will continue for up to three months. That would extend to the second week of March, based on the date of Tribune's bankruptcy. After that, you may be on your own. I would even argue that this could change before then, if the financial situation continues to deteriorate, as is expected. See the Baltimore Sun's story about Thursday's bankruptcy hearing here www.baltimoresun.com/business/balbz.tribune11dec11,0,3266475.story. By the way, note that the correct term is terminated, not laid off.

401Ks -- They are safe, although Tribune stopped contributing to the 401K plan earlier this year.

Defined pension benefits -- Tribune has a defined pension plan that was phased out some years ago. It appears to be safe for now. However, the thing to watch is whether Tribune turns the pension plan over to the Pension Benefit Guaranty Corp., as other bankrupt companies have done in the past. If this were to happen, folks who earned the highest salaries under the plan would be most affected. The pension plan has more than $500 million in surplus assets. Tribune has used about $60 million of this for pension benefits for departing employees. See the Wall Street Journal story referenced above. Full disclosure: As a former Tribune employee, I am scheduled to receive a small pension when I reach retirement age.

Severance payments -- If you are owed severance payments or deferred compensation, get in line with other creditors. Tribune said it would discontinue these payments immediately.

Bear in mind that when a company seeks protection under bankruptcy, all this remains fairly fluid and is subject to change at any time. A second bankruptcy hearing is set for January 5.

And the People Said ...

For some reason, (media moguls) assume people will want to buy more newspapers if they have less news in them and are less useful ~ Molly Ivins

A newspaper is a circulating library with high blood pressure ~ Arthur Baer

Newspaper readership is declining like crazy. In fact, there's a good chance that nobody is reading my column ~ Dave Barry

America is a country of inventors, and the greatest of inventors are the newspaper men ~ Alexander Graham Bell

Editor: a person employed by a newspaper, whose business it is to separate the wheat from the chaff, and to see that the chaff is printed ~ Elbert Hubbard

Newspaper Jokes

Two newspaper reporters walk into a bar, and discover these bada-bing jokes. Send in your own favorites.

Some American newspapers have outsourced their customer service, copy editing and other functions to a company in Mumbay, India. The public face of the company is an Americanized Indian named Helen Waite. Journalists looking for jobs in American papers now must dial Helen and wait.

What's the difference between a managing editor and a sack of fertilizer? The sack.

Why is a headline like a Scud missile? Both are offensive and inaccurate.

What's the difference between a features editor and an onion? People cry when you cut an onion into pieces.

How do you know when there's a circulation consultant at the door? His hat says "Domino's."

If you threw a reporter and a photographer off a cliff at the same time, who would hit bottom first? Two answers: 1. The photographer, becausethe reporter would get lost on the way. 2. Who cares?

About Me

I spent nearly 25 years in the newspaper business at five different newspapers, including the Wall Street Journal, the Orange County Register, the San Juan Star (Puerto Rico) and the Reno Gazette Journal. My last paper was the Orlando Sentinel.
I am blogging about the Orlando Sentinel because attention must be paid to the decline of the Orlando area's only major source of daily news, and to the historical makeover of the newspaper industry in general. Keep your comments and tips coming. Reach me at maria_padilla@bellsouth.net.